Planned Assets Planning Blog

I’m sure no one reading these blogs knows (I didn’t) or cares that food cooks in oil slower than water, even when both liquids are exactly the same temperature.  According to Cook’s Illustrated (March-April 2012)-Kitchen Notes, “This is true….  But how can this be? Isn’t temperature what determines speed of cooking?”  Actually, “equally critical is the liquid’s thermal capacity, or how much energy is needed to change its temperature by 1 degree centigrade.  Oil has roughly half the thermal capacity of water, which means it requires half the amount of energy to reach the same temperature as an equal volume of water.  This, in turn, means it has less energy to transfer to food and will cook it more slowly.

Don’t believe it?  Heat equal amount of water and oil to 135 degrees and then stick your finger in.  They will come out of the water faster than the oil.

Sounds like a science project!

What is a “Wealth Transfer”?  The definition used here for “Wealth Transfers” is and unknowingly or unnecessary transfer of wealth (income) out of the family.  A wealth transfer can be the way we pay our taxes, mortgage, even our credit card bills or any other expenditure we may have.  The point; is there a more efficient means of handling this outflow and was it necessary in the first place?  The average American may have as much as 20% of income lost to Wealth Transfer without his or her knowledge.

Even the most astute money handlers have wealth transfers they do not recognize.  The largest cause of wealth transfers is Inattention.  Something like our phone bill may have wealth transfers called “cramming” where two or three dollars are lost each month.  Perhaps two or three dollars a month is not worth worrying about but it is thirty-six ($36) dollars per year and may be a great deal more.  Regardless of claims to the contrary most of us have little idea how much discretionary income we have each month or where it goes, it just goes.  The other principal cause of Wealth Transfers is Conventional Wisdom.  Conventional Wisdom is something we take for truth because everyone else does.  Madoff and Enron are only two examples of Conventional Wisdom going awry.  However, the most costly to Americans when added together is handling of our mortgages.

Stopping wealth transfers is THE most effective way to increase Wealth Accumulation and Life Style.  Termination of wealth transfers is usually more effective building wealth than increasing rates of return on investments and comes with no risk in doing so.   The loss of a dollar to a wealth transfer is not just the loss of the dollar but the future Opportunity cost that dollar had.  That is the money that dollar could have returned if it had not been loss.

Consolidating and paying off debt as soon as possible is and has been sound advice for increasing the distance your pay check will go.  But is termination of all debt good or even possible for most Americans?  If you can live without debt, your pay check can go further and your savings may grow faster but perhaps not always.

There is both good and bad debt.  Good debt is debt taken for capital goods and debt wherein you can write off the interest in other words the debt is Tax-Efficient.  Bad debt then is debt that is not tax efficient, debt spent on consumables, everyday expenses, etc; debt that cannot be paid in full at the end of the month.  There is good debt and better debt but how you arrive at better debt is how the debt is structured and how it is used.  One example is buying a home.  Assuming you have used good sense and are not buying more house than you can afford, changing this good debt to better debt is based on how your mortgage is set up.  This factor is always important but now during this window of very low mortgage rates how you set the mortgage up will affect you for a very long time, most likely for life.  The good news is this can be fixed

Common wisdom has always been to pay of you home as soon as possible if possible pay cash or take a 15 year mortgage.  If you can’t afford to pay cash or take a 15 year mortgage get a 30 year and then make extra principal payment, but pay it off as quickly as possible.

Common wisdom is questionable at best and just plain wrong for most.  In fact Paying off Your Mortgage is a Mistake and perhaps the worst thing financially you could do!

Money paid in interest does not have to be money thrown away and do you care how rich a financial institution gets as long as you are making more than you are paying.  Using other people money can be very profitable when used right, something financial institutions discovered long ago.

For a white paper why Paying off your Mortgage is a Mistake, please email me (Hubert McMinn) at This e-mail address is being protected from spambots. You need JavaScript enabled to view it. list as subject: Wealth Transfer: Mortgage.

Most of us will not read the Presidents’ Budget proposal and it's doubtful the Senate will even consider it.  After all they have not passed or considered a budget in the last 3 years.    But there are several items he would like to do that should not escape the attention of all of us, regardless of our income.  The fact is what is put upon some has always eventually trickled down to the rest of us at some point.

One proposal would limit the tax rate at which high-income taxpayers can reduce their tax liability to a maximum of 28%, right now would only affect married taxpayers filing a joint return with income above $250,000 and single taxpayers with income above $200,000.  This limit would apply to itemized deductions, foreign excluded income, tax-exempt interest, employer sponsored health insurance and retirement contributions, “PlanSponsor” reported.

This attack would penalize these couples and individuals who save for their retirement. “The tax breaks targeted in the proposal are deferrals, not write offs, so people hit by the changes would effectively be subjected to double taxation,” Brian Graff, executive director and CEO of the American Society of Pension Professionals and Actuaries, was quoted as saying.

Do you know what an Index Fund is or does?  Index funds are available as standalone investment funds, with Equity Index Annuities where you cannot lose principal and Variable Life and Annuity policies.  Article by Jason Zweig; ‘The Intelligent Investor” Wall Street Journal 11/27/2010), titled “Are Index Funds on Track to Become Even Harder to Beat?” is well worth reading.

Mr. Sweig states “index funds continue to make investing cheaper and easier than ever. For investors in these low-cost, autopilot portfolios that dispense with stock pickers and passively replicate the holdings of a broad basket of stocks or bonds, the best is yet to come.” 

The article points out “Over the past decade, Vanguard Total Stock Market Index fund has gained an annual average of just 1.79%....  ...according to Morningstar, this autopilot fund outperformed two-thirds of all other stock funds, including those run by managers trying to beat the market.  Another point, “the Dow Jones U.S. Total Stock Market Index is up 10.3% thus far this year.” (December 2010) Has Index funds had their problems, they have but mostly or completely due to regulation, changes are taking place starting January which may resolve this.  Hundreds of Index funds are available through many sources and set to be available in 401(k) plans as investment options or 401(k) Equity Index Annuities in 2011.

Reviewing your phone bill may not sound like a way to stop wealth transfer (money transferred unknowingly and unnecessarily out of income) but $2 or $3 dollars or more each month can add up to an interesting amount each year.

Most of us really never review our phone bill and doing so may seem like a lot of bother, but doing so may stop some insidious fees.  Unauthorized or deceptive charges on a phone bill are known as “cramming”, they show up quite often, they continue to show up until you stop them and phone companies care less.  These charges are initiated by third parties and may be for almost anything.  According to the Senate Commerce Committee last year, phone companies collect more than $2 billion worth of third party charges each year, most or not authorized and the problem is growing.

Cramming charges are normally relatively small perhaps no more than $2 or $3 a month and most often listed as service fee or voicemail.   Most of these charges are not for legitimate services but customers are enrolled from available information such as your phone number.  And yes, your phone company collects a fee for allowing these extra charges.

Cell phone customers have become a favorite for this problem with charges usually appearing as a fee for downloads or text services.

Scrutinizing your bill for odd little charges with names you have never heard of or don’t understand could save you several percentage point on you bill each month.  If you see or think a charge is unauthorized call your phone company and ask for the reason for the charge.  If it doesn’t make sense ask for it to be removed just like you would for a false charge on your credit card.

Want to file a complaint, call the Federal Communications Commission at 888 225 5322 or go to www.fcc.gov/complaints.

Guaranteed Income is the amount of monthly income you must have and derived from your retirement assets amd most importantly your retirement budget which you established as you develop your retirement plan.  This amount will change over time but you must have a starting point.  Initially creating a flow of guaranteed income to meet minimum income requirements frees you to develop a better mor complex retirement allocation plan: arranging assets to achieve desired balance for desired income future liquidity needs, making allowances for inflation, special events and even bequests.  The key is to develop pots of money or assets for different uses starting with minimum financial requirements; know the amount, know where it will come from and know it will be there regardless of the economy, market or interest rates.

30% or less of retiring or retired seniors has a written retirement plan, even less have had a critical review and/or update.  Your retirement plan is only as good as your last critical review and update.  Developing a retirement plan is hard work even when using an advisor.  To develop an appropriate plan is not something you complete, but an ongoing work in progress.  Periodically reviewing the plan to reflect life changes, comparing it to where you wanted to be as to where you actually are then updating the plan is mandatory to success, as well as making good sense. 

Retirment plans should be reviwed at least twice a year.  Establish a date early in the year, each year, as a habit to initially reassess or review retirement plans pre or post retirement.  You should review your plan several times a year with your advisor or personally.  Marking your calendar with a certain dates in advance for the reviews each year is a good practice.  A personal review allows you to examine how your plan functioned in the past year, reassess your relationship with your planner and consider new directions or changes you might make.  During the review you should identify concerns as well as what you like about your current plan.  Then, if you work, you should, with an advisor prepare an itinerary for your meeting with him or her later.

A typical retired couple may add as much as 20% to their after-tax retirement income by coordinating when to use different categories of their money in retirement?

Most individuals have three financial legs to support them in retirement: (1) Social security benefit; (2) qualified retirement savings and (3) non-qualified savings and investments.  A majority of couples and individuals may by selectively coordinating how they use assets within these three sources actually improve after-tax retirement income up to 20%.  Unfortunately, most overlook the importance of coordinating use of available assets, resulting in higher tax.

Why?  There are several reasons why many Americans lose up to 20% of possible retirement income:

1. Knowledge:  The United States Income Tax system actual consist of two systems.  Those understanding the system, rules and loop holes always pay less in percentage of income.  Of course those who do not have this knowledge always pay a greater percentage of income.  The problem is most are not even aware of what they do not know and spend most of their energy obtaining minor savings and missing savings opportunities contributing to successful retirement.
2. Planning:  The majority of American retired retire without a written retirement plan.  Successful business requires an effective written plan if it hopes to succeed and your retirement is your business.
3. Conventional Wisdom:  Too many professional planners, as well as pre and post retired people stick with conventional wisdom even if it is wrong.  As all of us have told our children, “just because everyone else is doing it does not make it right”.  Conventional wisdom may actually cost you 20% more in tax than necessary.

The Feb. 3^rd issue of a newsletter I read projects there will be “More Fed Easing” very shortly.  This easing should take the form of a $1tillion buy up of mortgage-backed securities.  “The goal of the purchases will be to drive down interest rates even further from current record-low levels, and, less obviously, to spur confidence that more monetary tools remain to stimulate the economy.” (Moving Markets)

There are two important points here, if this happens: 1) Very likely we will see a stock market increase with Standard & Poor’s 500 increasing by another 11% to 1450 [Andrew Wilkinson, chief economic strategist at Miller Tabak].  The S&P 500 closed at 1324.09 Wednesday. 2) When the Fed creates dollars based on nothing, it lowers the value of the dollar.  Thus the stock is not really worth more, the dollar is just worth less. As the dollar sinks in value and stock prices rise, so will other prices such as groceries and other necessities.

Given the state of the economy (US) and world economy can this increase of stock value persist?  After the last “Fed Easing” in November we have seen stock prices increase, if an when this easing happens we can expect the same.  But dabbling in the market or gambling with money that cannot be replaced is not a good idea.  The ride may be exciting but if there is a correction or crash, and it is sure to come what is the cost?

 Coordinating when to use different categories of your money in retirement

Average individuals preparing for retirement has three financial legs to support them in retirement: (1) Social security benefit; (2) qualified retirement savings and (3) non-qualified savings and investments.  A majority of couples and individuals may by selectively coordinating how they use assets within these three sources actually improve after-tax retirement income.  Unfortunately, most overlook the importance of coordinating use of available assets before retirement, resulting in lower income and/or higher tax.

Coordination of retirement assets is require for  tax efficient draw down and stretching assets to meet retirement goals starting with efficient Social Security Benefit planning. While Social Security benefits are not guaranteed by law no party will commit political suicide by not fulfilling the Social Security promise.  However, up to 85% of Social Security benefits are now taxable based on provisional income and there is no doubt this will increase to 100% within a year or two.  Conventional wisdom leads many to start taking Social Security benefits as soon as possible.  But starting Social Security benefits prior to full retirement has two detriments, 3 for couples, besides the possibility of paying income tax on benefits: 1) You will lower benefits by as much as 30%,  2) If you earn more than $14, 640 you may have to pay back $1 for each $2 you receive in benefits an 3) the spouse’s benefit may be reduced by as much as 36%.  Without detailed retirement planning coordinating qualified savings, Social Security Benefits and non-qualified saving this option may appear best.  But millions following this advice will negatively affect their retirement and that of surviving spouse or other dependents. 

Is it time to have a conversation concerning your retirement plans? We are Planned Assets and we help!  Have a conversation with us, the only cost is a little of your time.  Investigate, now is the time to prepare for the rest of your life, register here [link], email ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it. ) or call (888 270 9870) procrastination is not on your side.     

Does your business need Key Person Insurance?

Do you have a key employee? Such an employee may also be the owner of the business, but generally speaking a key employee is one who has specialize abilities that are critical to the operation of the business and difficult or expensive to replace.  This could be almost any specialized ability from technical to your key salesman that brings in most of the business.

Then yes you do.  A specialized skill set may be difficult as well as expensive to replace at any time and the cost of recruiting specialized abilities can be expensive in cost and time.  What if this individual is your key salesman bringing in 40% of sales what is the cost of his loss? Can the company survive while you seek a replacement or replacements?

Any of a hundred scenarios could happen at the very worst time, financially.  If you have  key employ insurance paid by the company, the death benefit is paid directly to the business.  The funds are treated as an addition to surplus and may be received free of any direct income tax.

Is this an employee you would like to keep?

Key person insurance can be designed as part of an employee agreement sometimes known as a golden parachute.   Maintaining insurance on the key person and using a growing portion to take care of the individual’s family and/or using the cash value to fund a bonus over a certain period of employment can go a long way in keeping a key employee from being enticed away.

One use of key person insurance: Policy cash values are carried as a business asset, and are available as collateral for obtain commercial loans, or for borrowing directly from the insurance company.  Depending on policy, cash value may not be reduced and continue to accrue full interest during time of loan. There is no tax on the loan and interest may be fully deductible. 

Once the policy is no longer required, the policy may be sold to the employee or surrendered for value in access of premiums paid during the life of the policy.

As a business owner wouldn’t a conversation concerning protecting one of your key assets make sense? Today is the best time to have this conversation.  Please call (888 270 9870) or email ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it. ) to speak with or correspond with Hubert McMinn Jr.  Do it today!

Most Americans fail to recognize their limited Money Management skills and inability to focus what little free time is actually allotted to planning their financial future.  Because of lack of time, information or ineffective planning, money trickles out of income continuously, unnecessarily and unknowingly reducing savings and life style.

While increasing rates of return on saved assets is always helpful the associated increase of risk is not.  Today, many people are investing more aggressively in hopes higher returns will recover lost earnings or close a savings gap.  To close a savings gap or increase wealth accumulation, most financial professionals recommend maximizing the tax-efficiency of your portfolio, reviewing your asset allocation, and of course, “saving more and spending less.”  Always good advice, but you have taken these courses of action to the best of yours and your advisors capability and find it is not enough.  Now, apparently your only option is to spend less and reduce your standard of living or ramp up investment risk in hopes higher returns will close the savings gap.

Instead of searching for the perfect investment formula; we find the greatest potential for wealth accumulation is not higher return on your investment, but finding those places where inefficiency and resultant opportunity cost drain away income for savings and life style.  We call this drain “Wealth Transfers”; defined as unnecessary and unknowingly transfers of income out of the family.  It is not unusual to find wealth transfers of 15, 20% or more of earned income within a family.  We think stopping wealth transfers and redirecting part to saving and part to life style is more effective, safer and satisfying than taking additional investment risk.

We are Planned Assets and we would like to have a conversation with you about a subject you or your financial advisor may not be familiar with, Wealth Transfers.  Everyday wealth transfers erode saving and reduce life style by stealing income from Americans.  Saving 10, 15, even 20% of income due to wealth transfers is more effective and safer than increasing rates of return. 

If spending a small amount of time having this type conversation makes sense to please register at [link], call (888 270 870) or email ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it. ) Hubert W. McMinn.  There is no cost for the conversation just a small investment of your time and the return could be significant.

Recently the Japanese government stated; Japan and China will promote direct trade without using dollars and instead will use the Yen and Yuan. Japan has also stated it will also apply to buy Chinese bonds next year instead of U.S. bonds.

As a part of a plan outlined in October to promote use of the Yuan within the Association of Southeast Asian Nations and establish free trade zones, China will complete a 70 billion ($11 billion US) currency swap with Thailand.

If our government continues failing to take action concerning debt and deficit issues, if it continues to only print more money based on nothing the rest of the world will have no alternative but to find an alternative to using US Dollars as a world reserve currency. A point made clear by Russia and supported by France.

This recent action and it continuance will be and is a significant blow to the US Dollar. Diminishing the strength of the dollar and reduced purchase of US bonds will not help the US economy. These countries, China and Japan, represent two of the world’s largest economies and largest purchaser and holder of US bonds.

As the world’s largest debtor nation, moving the US Dollar from the principal world reserve currency and reduced purchase of US bonds will affect our economy significantly. China is in direct economic competition with the US and China, the world’s largest creditor nation, is not the China of history.

A change of this magnitude will affect growth and recovery of our economy and each of us dramatically as taxpayers and consumers. As we move to 2012, the one thing we can expect is change. I we do not take note and continue to do what we have always done what will be the outcome. Now is the time to consider having an in-depth conversation about your wealth accumulation and optimization plans with us.

January 1, 2012 is the start of the 2012-2013 college year and all students (new or ongoing) hoping to receive financial aid for this period must complete the Free Application for Federal Student Aid (FAFSA) form, the sooner the better. The form is available as a paper version, PDF or there is an on line version. The application will only be accepted after the first, but any and all aid is based first on results of this form and all aid is first come first serve the sooner your student may get in line.

Private colleges and some public also require and electronically completed CSS/Financial Aid PROFILE Form as well and you will want to determine if a school your student is interested in requires this form. Understand that this form is more invasive than the FAFSA and will requires information the FAFSA does not.

Then some schools, mostly private, require completion of their own forms for aid. Graduate and some professional school students may also have to complete a Need Access Application.

To find out which forms are required by schools your student is interested in should be in the information booklets you have receive or on the schools website.

Caution:

1. These forms take thought, care, research and time. Do not rush to get them completed.

2. Make sure that you have all of the correct information required before you get started.

3. I stress correct, even more that you Tax return, these are forms you do not want to hedge on or provide almost correct information. Although the IRS must get a subpoena to see your FAFSA form the Secretary of Education has the authority to verify information of the FAFSA with the IRS.

4. Make darn sure you use the correct FAFSA form; for 2012-2013 the paper form is orange and purple.

The paper FAFSA can be obtained from most school guidance counselors or by calling (1-800-433-3243). Make sure you ask for the specific year form. To down load or complete on line go to www.fafsa.ed.gov.

Will Rogers once said “Return of your money is sometimes more important than return on your money.”

IMF Chief Christine Lagarde recently speaking at the U.S. State Department in Washington said; “There is no economy in the world, whether low-income countries, emerging markets, middle-income countries or super-advanced economies, that will be immune to the crisis that we see not only unfolding but escalating.”

Economist’s as opposed to market commentators forecast economic ‘deflation’ as the only possible scenario in the decade ahead. The cliché about things in our time being unlike the experience of our parents or grandparents is well known, but wrong touching economics. “Nothing new under the sun” is more appropriate, because we see the current situation similar to the U.S. of the 30’s or Japan of the 80’s and 90’s. Deflation and the nation’s response will affect us dramatically as taxpayers and consumers right when we are trying to address our own goals, needs and retirement planning.

--How do I recover from my losses since 2008?

--How do I secure my finances for the future?

--Will I run out of money in retirement?

--What about the volatile stock market?

If you lost money, we can show you how to recover back to where you were and grow without increasing your risk.

Planned Assets is a financial planning firm helping individuals and families throughout Texas protect and grow wealth through successful financial strategies.

Whether you have a net worth of a million dollars or more, in the middle of your wealth-building plan or trying to dig yourself out of a financial hole we can help protect and grow your wealth through safe and predictable financial strategies.

We believe in building with Safe Money, and we only work with programs not exposed to the open market.

We believe stopping unnecessary transfers of wealth is an appropriate accumulation strategy to increasing rates and risk.

We believe in Reasonable Rates of Return.

And, we believe in Simple. If you don’t understand it, you shouldn’t own it.

For a no-cost phone consultation, feel free to call us at (888) 290-9870 or complete this form.

Planned Assets 131 West Brook Dr. Texas 77484

A successful retirement doesn't just happen; it must be planed for. Initial panning involves control of current assets and income through a budget process. Developing or proceeding with a systematical saving plan for the money you will need, making sure it is suitably invested has always been considered the next step. However, the majority now in retirement and those actively planning for retirement are not only underestimating the amount of money that will be needed, but allowing 10, 20 even 30% of income and invest-able assets to be transferred unknowingly and unnecessarily out of the family. With the decrease of invest-able assets because of wealth transfer many resort to chasing investments with higher rates of return and high risk often with disasters consequences. Once retirement starts, emphasis shifts to spending and safeguarding, but with continued wealth transfers compounded by volatile financial market and underestimation of required assets most retirement plans have little chance to be as effective or successful as planned.

Americans, particularly Baby Boomers, are more nervous about and unprepared for their retirement today than at any time in history. Though 401(k) balances reached an all-time “high “of $71,000—reetirement confidence has fallen to an all-time low. Even though the greatest challenge in retirement and probably your greatest fear, is outliving your money, most Americans spend less time planning their retirement than they do a vacation. It is never too late to start retirement planning, and it is never too early to refine plans you have already made.

Without professional financial help, you know your chances of “Stumbling Across” or developing a retirement program you desire and obtaining the success you know you’re capable of achieving is less than optimal. Planned Assets has the capability of guiding you to a successful long term plan.

We each get only a few opportunities in life to get on a higher path and Planned Assets will help you find your higher path—and guarantee you take consistent action to meet your retirement goals. Call or email us today, (888 270 9870 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it. ). If you procrastinate or wait, the chances of you taking action in the future are very slim.

Wow,

What a great year! Planned Assets has had a great decade despite the economic downturns of late and is excited to unveil our new website and financial information hub/blog.

As the senior CTO (Chief Technology Officer) for our company you can imagine the excitement of our expansion. We look forward to offering more indepth informational and fiscal planning than we have ever offered.

In the months to come our goals are to expand our consulting division and add 10,000 new families and business to our investing family.

We look forward to serving you!

Sincerely,

Michael H. Twigg M.Ed. - CTO